Open Sesame: A Value Chain Analysis of Sesame …CGIAR is a global agriculture research partnership...

Socioeconomics Discussion Paper Series

Series Paper Number 6

Open Sesame: A Value Chain Analysis of

Sesame Marketing in Northern Uganda

B Munyua, A Orr, J Okwadi

ICRISAT, Nairobi, [email protected]

7/20/2013

Disclaimer

This paper is part of ICRISAT Economics Discussion paper series. This series disseminates the findings of work in progress to encourage the exchange of ideas about a wide array of issues in the area of agriculture for development. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. Any comments and suggestions are more than welcome and should be addressed to the author who’s contact details can be found at the bottom of the cover page. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Crops Research Institute for the Semi-Arid Tropics and its affiliated organizations.

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Open Sesame: A Value Chain Analysis of Sesame Marketing in Northern Uganda

ICRISAT - Socioeconomics Discussion Paper Series i

Abstract

Uganda is the world’s fifth largest producer of sesame. The northern and eastern regions are

the main centres of production. Almost all the sample farmers had grown sesame in the two

crop-growing seasons in 2009-2010. The mean area planted to sesame was 0.37 ha across

the two seasons, and the mean production was 222 kilograms per household. On average

77 % of the sesame produced reached the market with each household selling 173

kilograms. Gross income from improved varieties produced for grain averaged $ US 282 per

household or $ US 56 per head assuming a family of five. This represented an additional $

US 92 per household or $ US 18 per head over the corresponding income from local

varieties of sesame. These results suggest that sesame can make a significant contribution

to household income in the Northern Region. The challenges to sesame production at the

farm level include: lack of equipment for land preparation, which leads to late planting; crop

losses from pests and diseases, which reduces yields; non-availability of seed; and labor,

particularly for weeding the crop which is sown broadcast. Smallholders produce small

amounts, their bargaining power is weak and prices are low. A sesame value chain map was

developed showing the volume handled by the various actors along the chain as the

commodity moves from farm gate to the consumers and export markets. The study found

that, of the total sesame produced, 77 % is sold. Of the total sesame produced, 42 % is

exported, 10 % is sold to urban consumers, and 25 % is sold to rural consumers. Therefore,

only half of the sesame that is produced leaves the production regions to regional and export

markets. The market structure involves numerous traders, which reduces the farmer’s share

of the final price. On average, the farmer receives 70 % of the ex-local assembly level price

and 60 % of the ex-regional level price. Thus, if farmer were to sell collectively at regional

level there is potential for a 10 percent increase in prices compared selling at the farm gate.

Traders reported the most important traits were grain color (86%), cleaned grains (71%) and

percentage of foreign matter (54%). Traders preferred white colored grains when buying

sesame. Sesame II, an improved variety promoted by this project, is white in color and

therefore has high market demand. Nonetheless, traders did not report rejection based on

grain color. The majority of traders had no shape preference in either buying or selling.

Interviews with traders indicated that buyers were satisfied with quality of sesame on offer

and 80 % reported that the quality of sesame in the market was improving. Unlike traders,

exporters and rural assemblers gave a higher priority to cleanliness. The problem of

cleanliness of arises during the shelling and drying stages of sesame harvesting. Most

farmers thresh and dry sesame on the bare ground, this leads to unclean sesame grains

since sesame becomes mixed with soil. Uganda is the world’s sixteenth largest exporter, by

volume. All sesame exports from Uganda are as raw seed rather than oil and other

processed products. The three major export markets are Europe (Austria, Denmark,

Germany and Switzerland), the Middle East (Turkey, Egypt and United Arab Emirates) and

the Far East (Singapore, Japan and China). Sesame exported to Europe and the Middle

East is used primarily for the cuisine and confectionery industry while exports to the Far East

are used primarily for extracting sesame oil. Access to the European market has stringent

certification and standardization requirements. Europe pays the highest value per unit for

Uganda sesame, but accounts for only a small share of the total volume of exports. Most

Uganda sesame is exported to the United Arab Emirates and China which pay the third

lowest and the second lowest prices, respectively. Targeting the European market will

increase the average unit price of exported sesame and the total value of exports. However,


ICRISAT - Socioeconomics Discussion Paper Series ii

markets in the Far-East and China do not discriminate based on quality and have little if any

requirements for entry. Consequently, farmer and traders have no incentive to invest in

practices that will increase eligibility of sesame for access to higher value markets. Only one

Ugandan firm (Shares Uganda) exports organically certified sesame creating a niche market

and receiving premium prices. However, the distinction between organic and conventional

sesame is unclear since few if any growers use inorganic chemicals in sesame production.

Shares Uganda had invested in forming producer groups and increased the traceability of

producers, as well as investing in mechanized cleaning and sterilization equipment.

However, at local and regional levels no difference was found between the price of

conventional and organic sesame.

Keywords: Business Models, Dryland Cereals, Sorghum, Millets

JEL classification: O200


ICRISAT - Socioeconomics Discussion Paper Series iii

Contents

Abstract.................................................................................................................................. i

Contents ............................................................................................................................... iii

List of Tables ........................................................................................................................ iv

List of Figures ....................................................................................................................... iv

Acronyms .............................................................................................................................. v

1. Introduction ................................................................................................................... 1

1.1. Background ........................................................................................................... 1

1.2. Sesame Improves Livelihoods for Farmers Project ................................................ 2

2. Objectives ..................................................................................................................... 3

2.1. Sesame Improves Livelihoods for Farmers Project ................................................ 3

3. Data and Methods ......................................................................................................... 4

3.1. Value Chain Analysis ............................................................................................. 4

3.2. Survey Methods ..................................................................................................... 4

3.3. Sampling ............................................................................................................... 2

4 Results and Discussion ................................................................................................. 4

4.1. Actors Along the Value Chain ................................................................................ 4

4.2. Sesame Production ............................................................................................... 8

4.2.1 Cropping Systems in Northern Uganda .............................................................. 8

4.2.2 Sesame Seed Yields ......................................................................................... 9

4.2.3 Seasonality of Production .................................................................................. 9

4.2.4 Regional Sesame Production and Sales .......................................................... 10

4.2.5 Household Income from Sesame ..................................................................... 10

4.2.6 Market outlets at the farm gate ........................................................................ 13

4.3 Sesame Marketing ............................................................................................... 15

4.3.1 Value Chain Map ............................................................................................. 15

4.3.2 Trader profile ................................................................................................... 16

4.4 Prices .................................................................................................................. 20

4.5 Access to Credit .................................................................................................. 21

4.6 Market information ............................................................................................... 22

4.7 Grain and batch characteristics considered in sesame marketing ........................ 23

4.8 Trends in Sesame Seed Business ....................................................................... 26

4.9 Strengths and Weaknesses of Sesame Production and Trade ............................ 27

5 Exports ........................................................................................................................ 30

5.1 Sesame Export Destinations ................................................................................ 31

5.2 Niche Markets: Organic Sesame ......................................................................... 32

6 Conclusions and Policy Implications ............................................................................ 34

References ......................................................................................................................... 36


ICRISAT - Socioeconomics Discussion Paper Series iv

List of Tables

Table 1: Distribution of Sampled Farmers.............................................................................. 3 Table 2: Distribution of Sampled Traders ............................................................................... 3 Table 3 Crop Area by season (ha) ......................................................................................... 8 Table 4 Mean household sesame seed yields area and production ....................................... 9 Table 5 Sesame Production and Sales, by Region .............................................................. 10 Table 6 Partial Budget for Sesame, Northern Uganda (Ugs/Ha) .......................................... 12 Table 7 Household Income from Sesame, Northern Uganda ($ USD/Household) ............... 13 Table 8 Trader Profiles and Organization of the Sesame Marketing Activities ..................... 18 Table 9 Trader Asset Holding for Selected Items (Number of Traders who Reported Owning Asset) ................................................................................................................................. 19 Table 10 Sesame Selling Prices in Different Marketing Channels ($ Us/Kg)........................ 21 Table 11 Access to Credit by Traders .................................................................................. 22 Table 12 Access to information by traders ........................................................................... 23 Table 13 Traders’ Sources of Information ............................................................................ 23 Table 14 Sesame grain characteristics considered in buying and selling ............................. 24 Table 15 Sesame Batch Characteristics Considered in Buying and Selling ......................... 25 Table 16 Ranking of Sesame Quality Traits by Traders When Buying and Selling ............... 25 Table 17 Traders’ Storage Practices .................................................................................... 26 Table 18 Trends in Sesame Business ................................................................................. 26 Table 19 Ugandan sesame exports, 2005-2009 .................................................................. 30

List of Figures Figure 1: Trends in sesame Area and Production in Uganda 1981-2009 ............................... 1 Figure 2: Map of Project Regions .......................................................................................... 3 Figure 3: Structure of Sesame Marketing System in Uganda ................................................ 7 Figure 4: Sesame production and marketing calendar .......................................................... 9 Figure 5: Shares of Aggregate Market Volume by Market Channel ..................................... 14 Figure 6: Value Chain Map for Sesame in Northern Uganda ............................................... 16 Figure 7: SWOT Analysis Matrix for Sesame Trade ............................................................ 28 Figure 8: Trends in export prices, 2001-2009 ($ US per tonne) ........................................... 31 Figure 9: Sesame export prices and volumes for major destinations ................................... 32


ICRISAT - Socioeconomics Discussion Paper Series v

Acronyms

ADA Austrian Development Agency

BMF Federal Ministry of Finance

FAO Food and Agriculture Organization

GLOBALGAP Global Good Agricultural Practices

ICRISAT International Crops Research Institute for the Semi-Arid Tropics

IPGRI International Plant and Genetic Resources Institute

ITC International Trade Centre

MAAIF Ministry of Agriculture, Animal Industry and Fisheries

NARO National Agricultural Research Organization

NaSAARI National Semi Arid Resources Research Institute

NGO Non-Governmental Organization

NOGAMU National Organic Agricultural Movement of Uganda

SWOT Strengths, Weaknesses, Opportunities, Threats

UBOS Uganda Bureau of Statistics

UOSPA Uganda Oil Seeds Processors Association


1

1. Introduction

1.1. Background

Sesame has been cultivated since antiquity (IPGRI 2004). Grown mainly in the tropics,

sesame production is dominated by smallholders in developing countries. Sesame

production in Uganda between 2004 and 2008 averaged 158,600 tonnes/year (FAO,

2010). Uganda is the world’s fifth biggest producer of sesame after India (666,020),

China (627,333), Myanmar (511,800) and Sudan (333,600) (FAO, 2010). Until 2002, the

production of sesame in Uganda stagnated because of insecurity in the Northern region

which is the main centre of production. Recently, with peace and improved security in

the main producing region, sesame production has grown both in volume and in value.

Between 2002 and 2008 sesame production in Uganda grew by 66 % (from 106,000 to

173,000 tonnes) while the area planted to sesame increased by 38 % (from 211,000 to

286,000 Ha) (Figure 1).

Valued for its small white nutritious seeds, sesame (Sesamum indicum L.) is locally

known as simsim in East Africa. The crop is grown in Northern and some parts of

Eastern and Western Uganda (Ashri, 2007). It is a high value crop with ready domestic,

regional and international markets. Sesame is produced by smallholder farmers who

grow it both for home consumption and as a cash crop. With the recent surge in global

demand for sesame and sesame oil, farmers in Uganda have turned increasingly to

growing sesame as a cash crop, earning it the nickname ‘white gold’ in Northern

Uganda.

Figure 1: Trends in sesame Area and Production in Uganda 1981-2009

020406080100120140160180200

0

50

100

150

200

250

300

350

1981 1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009

Pro

du

ctio

n(0

00

T)

Are

a (0

00

Ha)

Year

Area Harvested (Ha) Production (tonnes)


2

Sesame derives its high value from its many uses both in domestic and export markets.

The crop is used as an additive for bread and confectionery industry, for food in Middle

Eastern cuisines, and as a source of valuable and high quality oil (44 to 55 % oil

content). Sesame oil is traded internationally and is rich in vitamin E and has a

significant amount of linoleic acid that can control blood cholesterol levels. In addition,

the protein content of the seed is about 26 % and the sulphur containing amino acid

methionine is present at a concentration of about 3.4 % (IPGRI 2004) Further, the oil has

medicinal and pharmaceutical value and is being used in many health care products.

The seed also has antioxidants lignans such as sesamolin and sesamin and used as

active ingredients in antiseptics, bactericides, viricides and disinfectants. After oil

extraction, the remaining meal contains high amount of proteins and calcium which is an

ingredient in the animal feed industry. These qualities make sesame a prime commodity

in the global market and therefore one with great potential for poverty alleviation, food

and nutrition security, household income generation and an important earner of foreign

exchange for Uganda.

1.2. Sesame Improves Livelihoods for Farmers Project

This report is an output from Sesame improves livelihoods of farmers: Enhancing

agricultural productivity and profitability in Northern Uganda, a project funded by Federal

Ministry of Finance (BMF), through the Austrian Development Agency (ADA). The

overall objective of the project was to increase incomes of smallholder farmers in West

Nile, Acholi, Lango and Teso regions of Uganda (Figure 2). The project envisioned that

more than 20,000 farmers would benefit with at least a 20 % increase in income. The

project explored alternative institutional arrangements for linking farmers to markets,

standardizing quality grades, strengthening value chains and providing reliable market

information to facilitate smallholder market participation and trade at different levels. One

viable strategy to reduce transaction costs is for smallholder producers to evolve new

forms of organization through collective action that would help coordinate production and

marketing functions.


3

Figure 2: Map of Project Regions

2. Objectives

2.1. Sesame Improves Livelihoods for Farmers Project

The general objective of this study was to map the value chain for sesame for both the

local and export markets, in order to identify opportunities to enhance the incomes of

growers and other actors in the value chain.

The four specific objectives were to:

1. Describe the structure and functioning of the value chain;


4

2. Measure the economic returns to participants along the value chain; 3. Identify market constraints and opportunities; and 4. Identify opportunities for market expansion.

3. Data and Methods

3.1. Value Chain Analysis

The challenges of sesame marketing can be addressed through a better understanding

of the linkages between the farmers, traders and other actors along the commodity value

chain. The value chain concept is a systems approach that draws from different

disciplines; as a systems approach it combines component and functional relationships

(Da Silva and De Souza Filho, 2007).

There are a variety of approaches to conducting a value chain analysis. Some rely

heavily on qualitative tools while others propose a combination of qualitative and

quantitative tools in carrying out a value chain analysis. Hellin (2006) proposed that the

value chain analysis should commence with delineating the value chain by creating a

map of the market. This market map aids in building an understanding of different

players or actors in an input or output value chain. The market map also helps in

identifying the relationships between the actors as well as the factors that determine how

well or badly the value chain is working. After understanding the different actors one is

able to identify the different tools to use for different actors such as trader surveys.

Value chain mapping involves creating visual representation between businesses in

value chains as well as other market players. It helps illustrate and understand the

process that an agricultural commodity goes through from the farm gate until it reaches

the final consumer. A value chain map is also useful in identifying and categorizing key

market players and support organizations. The value chain illustrates the different

market channels that a product takes before reaching the final consumer. Therefore a

value chain is an important tool to use for identifying bottlenecks, as well as possible

opportunities that may not be apparent otherwise.

3.2. Survey Methods

A combination of qualitative tools and quantitative tools were used for different

categories of actors along the value chain. Structured questionnaire were used to collect

quantitative data from farm households and local traders. Checklists and unstructured

interviews were used to obtain qualitative data from key actors along the value chain,

including established sesame dealers at regional markets, exporters, officials from the

Ministry of Agriculture, Non-Governmental Organisations (NGOs) and industry

associations.


2

A Strengths, Weaknesses, Opportunities, Threats (SWOT) analysis was used with

sesame seed traders to assess the internal and external factors that affect the

performance of the trade now and in the future. The SWOT tool is a 2 x 2 way analysis

where strengths/weaknesses (internal factors) and opportunities/threats (external

factors) are presented. A SWOT analysis is a subjective assessment of data organized

in a logical order that helps in understanding, presentation, discussion and decision

making.

The field work for the study was carried out in two phases. A reconnaissance visit was

made in November, 2010 to interview various stakeholders in order to familiarize

ourselves with the issues of sesame production and marketing and to identify the data to

be collected by a formal quantitative survey. This was followed by a value chain survey

in February, 2011. Since marketing of sesame peaks in January and February, this was

the most appropriate period to meet producers, traders, transporters, processors,

exporters as well as other organizations that play important roles in the regulation of

sesame trade.

3.3. Sampling

The sample farmers and traders were selected using a multistage sampling procedure

based on the following criteria and considerations. First, we purposely selected three

regions (Teso, Lango and Acholi) that constituted the project area. To capture the

marketing activity from the grassroots (sub-county) level to the regional markets, two

grass roots centres and the major regional centre were selected for the study, giving a

total of six sub-counties in the three regions. Secondly, with the assistance of NaSSARI,

two farmer groups were randomly selected from the list of groups that had participated in

each selected centre.. A list of members for each farmer group was made and three

respondents were drawn using systematic random selection to participate in the survey.

To capture project spill overs and capture the behaviour of non-group members, two

neighbours for each group member were interviewed as a control. In total 71 farm

households were sampled.

Traders were randomly selected from the trading centre nearest to the farmer group as

well as from the regional centres to capture the flow of sesame from the grassroots to

regional centres and eventually to the capital city. Qualitative information was collected

from stakeholder in all the grassroots to the national level using snowballing technique.

In total 48 traders were sampled.

Tables 1 and 2 present the sample distribution for the farmer and traders, respectively.


3

Table 1: Distribution of Sampled Farmers

Region

Item ACHOLI LANGO TESO Kampala Total

No of farmers by region 17 19 35 71

No of farmers by district Alebtong 0 10 1 11

Amuria 0 0 6 6

Dokolo 0 9 0 9

Kaberamaido 0 0 15 15

Kole 0 0 13 13

Pader 17 0 0 17

No of Districts

1 2 3 6

No of Sub counties

3 2 3 8

No of Villages 6 4 7 17

Table 2: Distribution of Sampled Traders

Traders Markets ACHOLI LANGO TESO Kampala

Egwenya 1 0 0

1

Kaberamaido 0 0 4

4

Kangai 0 3 0

3

Lira 0 11 0

11

Okapel 2 0 0

2

Otongodel 1 0 0

1

Owalo 2 0 0

2

Soroti 0 0 4 4

Total 6 14 8

28

Trader Categories Rural open air

retailers/ assemblers

2 2 1

5

Rural wholesalers 3 2 0

5

Urban wholesalers 0 7 5

12

Exporters 0 2 0 4 6

Urban retail

shopkeepers

0 3 1 3 7

Supermarkets 0 0 0 4 4

Urban open air

retailers

0 0 1

1

Lango organic 1 0 0 1

Total 6 14 8 11 41


4

4 Results and Discussion

4.1. Actors Along the Value Chain

Figure 3 presents a schematic picture of the sesame marketing system. The sesame

value chain is composed of various actors who include producers, traders at different

administrative levels (sub-county, county, district and regional levels), transporters,

small-scale and large-scale processors and exporters. Other institutions that have a

bearing on sesame marketing include: the Ministry of Agriculture, the National

Agricultural Research System, (particularly the National Semi-Arid Resource Research

Institute (NaSSARI), which is mandated to develop improved sesame varieties), Uganda

Oil Seed Producers Association (UOSPA) an oil industry stakeholder association, Non-

Governmental Organisations (NGOs) working to improve livelihoods in the north and

eastern regions of Uganda as well as certification bodies especially certification of

organic products.

The study identified the following major actors in the sesame value chain, described

below:

Farmers: Sesame is produced predominantly by small scale farmers. The farming

methods employed in sesame production are simple and have not changed over many

generations. Farmers use animal draught for land preparation, broadcasting for planting

and manual weeding, harvesting, drying and threshing. As such, sesame farming is

characterized by low resource use with little mechanization or use of inorganic fertilizer

and chemical pesticides. Farmers have been producing sesame for subsistence

consumption and increasingly for income through the marketing of surplus production.

Traders: Due to the fragmented and small-scale nature of production, considerable

effort is required to assemble sesame into economically viable volumes for trade.

Sesame marketing is therefore characterized by numerous transactions involving small

volumes, and equally as many traders with variable capacity. These traders can be

categorized into categories based on the location, volumes handled and hierarchy along

the sesame marketing value chain. The categories include the following:

Rural assemblers: Various actors are involved in moving sesame from the farm gate to

the market. They include: traders on foot; bicycle traders, rural open-air market traders,

rural wholesalers, and rural shopkeepers.

Bicycle traders and traders on foot move from farm to farm during the marketing season

buying from farmers. These traders are mostly active on non-market days and then sell

the accumulated stocks to rural open-air traders. Rural open-air traders are traders

operating mainly on designated market days. They move from market to market on


5

designated market days as well as buying directly from farmers and other smaller

traders who move sesame from farm gate to market. These traders are seasonal and

operate for a short period after sesame is harvested when volumes are high. During the

off-season for sesame they move to other commodities.

Other traders to be found at the assembly stage include rural wholesale and retail

traders. These are stationary traders operating from permanent premises such as shops

and grain stores. They buy sesame continuously throughout the sesame marketing

season from farmers directly, and from foot traders, bicycle traders and open-air traders.

The bulked sesame is then transported to larger market centres in sub-county, county,

district and regional levels and sold to urban wholesale produce dealers. After locally

produced sesame is exhausted, these traders are involved in the sourcing of sesame

from larger markets and then retail sesame seed to farmers and rural consumers at the

grassroots.

Regional urban wholesale traders: these actors are found at regional market centres

such as Soroti, Lira, Jinja and Gulu. They are commodity traders with well established

businesses and the capacity to handle large volumes of sesame. They not only handle

sesame but other grains and legumes produced in the area. These traders are well

capitalized and have investments in storage and transport facilities. They also have

adequate access to formal credit. They buy sesame mainly from rural wholesalers and

sell to exporters and processors in the regional buying centres or transport bulked

sesame to exporters based in Kampala.

Exporters and Processors: Most exporters and processors are found in the capital city

Kampala. However, some exporters have buying centres in the production regions,

mainly West Nile Gulu and Lira. In Kampala, exporters screen, clean and bag sesame

into 50 kilo bags. The bagged sesame is then packed into 20 and 40 metric ton

containers which are transported to the shipping lines for onward shipment to the export

destinations through Mombasa. Domestic processors are smaller in scale. They handle

limited quantities of sesame which they process into snacks for confectionary industries

and into sesame paste for distribution to retail shops and supermarkets. Other small

scale processors operate in urban markets in lockups that mill and blend sesame with

groundnuts into sesame paste for application on bread.

Farmer groups and farmer associations: These are associations of farmers who are

brought together by common interests such as collective marketing, learning activities in

Farmer Field Schools, or participatory testing of improved sesame varieties with

research organizations. Membership of the association is from the local community.

Farmers were also found to engage in collective activities involving other crops besides

sesame.

Governmental bodies and the National Agricultural Research System: The Ministry

of Agriculture is involved in framing agricultural policy and regulations while the National


6

Agricultural Research Organisation (NARO) is involved in research. Sesame research is

carried out by NaSSARI, based at Serere in Eastern Uganda. Several improved varieties

of sesame have been released to farmers. SESAME II is the most popular as

established through participatory varietal selection with sesame farmers in the mandated

regions.

The Uganda Oil Seed Producers and Processors Association (UOSPA) formed in 1995

as an organization of producers, processors and other stakeholders, including traders of

oilseed products. UOSPA’s strategy has been to work through clusters of farmers in oil

seeds production and processing and to develop an integrated enterprise farming

system through the adoption of improved technologies, such as improved agronomic

practices, use of improved seed, proper post-harvest handling, and establishing savings

and loan schemes. UOSPA has been dedicated to fostering development of the

Uganda’s oil seed processors and producers and the edible oil sub-sector as a whole.

Non-Governmental Organizations: Several NGOs operate in northern and eastern

Uganda, working with clusters of farmers to promote improved livelihoods through

promotion of improved technologies, linking farmers to markets through formation of

groups and dissemination of market information, promotion of organic agricultural

practices through farmer training and facilitation of certification of organic produce. The

NGOs included NGETA and Concern International (CU) that work on improving rural

livelihoods, Lango organic farming, and National Organic Agricultural Movement of

Uganda (NOGAMU), two NGOs that promote certification of organic products in Uganda.


7

Figure 3: Structure of Sesame Marketing System in Uganda


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4.2. Sesame Production

4.2.1 Cropping Systems in Northern Uganda

Table 3 shows the average number of farmers growing each crop and the mean area

planted to different crops in the survey regions. Of the sample farmers, 97 % grew

sesame, and the area planted to sesame averaged 0.37 ha across the two seasons. A

higher share of sesame growers grew the crop in the first season (63 %) compared to

the second season (56 %).

Sesame was the most popular oil crop. About 30 % of the sample planted sunflower and

23 % planted soybean. However, the average area planted to these crops (0.5 ha for

sunflower and 0.43 ha for soybean) was larger than the average area planted to

sesame. Growers in Lango region had the largest area planted to sesame (0.42 ha),

followed by Teso (0.32 ha). The agro-ecology in the Lango region is more favorable for

sesame production and the marketing system is well-developed.

Table 3 Crop Area by season (ha)

First Season

Second Season

Total Area Under Crop by

Region

Crop Percent

Growing

Mean

Area

Percent

Growing

Mean

Area

Percent

Growing

Mean

Area

ACHOLI LANGO TESO

Sesame 63 0.28 56 0.26 97 0.37 0.33 0.43 0.35

Cassava 63 0.21 20 0.20 65 0.27 0.22 0.26 0.29

Millet 46 0.21 23 0.12 48 0.26 0.35 0.33 0.20

Maize 45 0.36 25 0.46 49 0.57 0.31 0.45 0.75

Beans 39 0.25 39 0.25 68 0.29 0.27 0.37 0.27

Soybean 24 0.36 7 0.27 24 0.43 0.35 0.40 0.49

Groundnuts 24 0.16 4 0.15 23 0.20 0.21 0.17 0.19

Sunflower 18 0.30 21 0.44 30 0.50 0.00 0.42 0.59

Sorghum 14 0.23 17 0.23 27 0.27 0.28 0.00 0.26

Sweet

potato 11

0.10

6

0.10

14

0.12

0.15 0.10 0.07

Source: Authors


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4.2.2 Sesame Seed Yields

Table 4 present sesame seed yields per hectare for the surveyed farmers by region. On

average, farmers in Teso region harvested 785 kg/ha, followed by Acholi region with 693

kg/ha, and Lango region with the lowest yields of 615 kg/ha. Average yields were higher

in the first growing season (705 kg/ha) than in the second season (636 kg/ha). The

average yield in both seasons for all three regions was 673 kg/ha. The project baseline

survey in the same region found average yields of 797 kg/ha for improved sesame

varieties and 537 kg/ha for local varieties (Muricho, 2010).

Table 4 Mean household sesame seed yields area and production

Region

Season 1 Season 2 Annual household

Yield/ ha

Area

(ha)

Production

(kg) Yield/ ha

Area

(ha)

Produc

tion

(kg)

Total

Yields

Kg/ha

Total

Area

(ha)

Total

produc

tion

(Kg)

ACHOLI 693 .31 215 505 .30 155 576 .33 206

LANGO 615 .40 189 588 .20 108 610 .43 205

TESO 785 .20 146 707 .30 174 745 .35 236

Total 705 .30 173 636 .29 161 674 .37 222

Source: Authors

4.2.3 Seasonality of Production

Figure 4 presents the seasonal calendar for sesame production and marketing activities.

The rainfall pattern in Northern and Eastern Uganda regions is bimodal. The long rains

start in March to May and the short rains in September and October. Sesame is grown

twice a year coinciding with these two rainy seasons. The marketing seasons follow

immediately after the harvest seasons in August and September for the first season crop

and January to February for the second season crop. Sesame sold in the second

season was found to be of a higher quality because of the longer period available for

drying the crop after harvest. However, farmers allocated more land to sesame in the

first season.

The ability to grow sesame in two seasons gives the crop greater potential to raise

household incomes. However, many farmers were rotating two oil crops (sesame with

sunflower), which reduced the yield of the second sesame crop. Farmers require

information on the appropriate cropping patterns.

Month Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb

First

season Planting Weeding

Harvesting

& drying Marketing

Second

season Planting Weeding

Harvesting

& drying Marketing

Figure 4: Sesame production and marketing calendar


10

4.2.4 Regional Sesame Production and Sales

Table 5 presents mean household and aggregate volumes of sesame harvested and

sold by region for all seasons. Overall, the sample households sold 78 % of the total

volume of sesame produced. Farmers in Lango region sold the highest proportion (88

%) of harvest, followed by Teso (79 %) and Acholi (62 %). At the aggregate level, Lango

region again sold the highest proportion of harvested sesame (84 %). Thus, in all three

regions sesame is grown primarily as a cash crop. The high proportion of sales suggests

that sesame has the potential to raise farm income.

Table 5 Sesame Production and Sales, by Region

Region

Mean household Regional aggregate

Total

harvest Total sales

% sales to

harvest

Harvest Sales

% sales to

harvest

ACHOLI 206 128 62% 3296 2050 62% LANGO 205 180 88% 4304 3597 84% TESO 236 187 79% 9682 7682 79% Total 222 173 78% 17282 13329 77%

Source: Authors

The average sales volume of 173 kg/household shows that sesame production is

predominantly small-scale and fragmented. Therefore, a considerable effort is required

to assemble and bulk the sesame into volumes that are viable for trade. Besides

problems of volume, small-scale production presents challenges of quality control,

including adulteration with soil during threshing, which makes it difficult to meet the

stringent standards (such as farm to fork traceability) required to access premium

markets. Low average sale volumes also limit the market opportunities available to the

farmer. It is uneconomic to transport small quantities of sesame to regional markets

which offer higher prices. This forces farmers to sell at the farm gate or in local markets

where prices are lower.

4.2.5 Household Income from Sesame

Household income from sesame was estimated by linking the partial budget for sesame

from the baseline survey with the estimates of mean area planted and volumes quantity

sold from the value chain survey.

Table 6 shows the net income from sesame for improved and local varieties. The cost-

benefit ratio for improved varieties is above 2 either when sold as grain or sold as seed,

meaning that for every shilling invested farmers receive two or more in return. The

higher cost-benefit ratio for sesame seed reflects the higher price for seed. Farmers

generally prefer to keep their own seed since to avoid the risk of buying poor-quality

sesame seed on the open market.


11

Table 7 shows household income from sesame. Two measures of income are shown.

Net income includes the variable cost of labor, while gross income excludes labor costs.

Over 40 % of the variable costs are accounted for by labor for weeding, harvesting, and

transport in the field to drying racks. Weeding and harvesting is mainly done by women,

carrying to the drying racks is done by children, and making drying racks is done

exclusively by men. Since the labor of women and children has a low opportunity cost

(meaning that it has no alternative employment), the cost of this labor may be excluded

in estimating income from sesame.

Gross income from improved varieties produced for grain averaged $ US 282 per

household or $ US 56 per head assuming a family of five. This represented an additional

$ US 92 per household or $ US 18 per head over the corresponding income from local

varieties of sesame. Gross income from improved varieties produced for seed averaged

$ US 454 per household or $ US 91 per head. This represented an additional $ US 148

per household or $ US 30 per head compared to local varieties. These results suggest

that sesame can make a significant contribution to household income in the Northern

Region.


12

Table 6 Partial Budget for Sesame, Northern Uganda (Ugs/Ha)

Activity Sesame

Grain Seed

Total revenue

All varieties 1,452,978 2,343,099

Improved varieties 1,647,399 2,656,401

Local varieties 1,109,979 1,789,821

Yield

All varieties 703 703

Improved varieties 797 797

Local varieties 537 537

Price 2,067 3,333

Variable costs

Land preparation 130,293 123,500

Seed 21,613 21,613

Planting/sowing 60,309 31,801

Weeding and thinning 137,908 151,288

Field pest and disease control 11,115 16,673

Harvesting and transport to rack 170,842 182,163

Rack building and racking 104,975 98,800

Threshing and winnowing 47,959 47,856

Field -homestead transportation 39,829 52,179

Bagging and storage 720 0

Storage pest control 720 0

Transportation to the market 11,733 14,820

Total variable costs 738,016 740,693

Net margins

All varieties 714,962 1,602,406

Improved varieties 909,383 1,915,708

Local varieties 371,963 1,049,128

Benefit-cost ratio

All varieties 2.03 3.16

Improved varieties 2.23 3.59

Local varieties 1.50 2.42

Source: Adapted from Muricho (2010). Note: 1 $ US = UGS 2166 in 2010


13

Table 7 Household Income from Sesame, Northern Uganda ($ USD/Household)

Variable Improved varieties Local varieties

Grain Seed Grain Seed

Total area planted (ha) 0.37 0.37 0.37 0.37

Yield (kg/ha) 797 797 537 537

Production/household (kg) 295 295 199 199

Household income:

Including labor costs 155 327 64 179

Excluding labor costs 282 454 190 306

Income per head:

Including labor costs 31 65 13 36

Excluding labor costs 56 91 38 61

Note: in 2010, 1 $US = UGS 2166

4.2.6 Market outlets at the farm gate

Figure 4 presents the marketing channels and the share of aggregate volume as

reported by the farmers at the farm gate. Household consumption accounts for 23 % of

aggregate production, while 50 % is sold to rural assemblers, 14 % is sold through rural

brokers, and 11 % is sold to rural retail shopkeepers who have permanently stationed at

trading centres. Direct sales between farmer to farmer/rural consumers account for 8 %.

Only 2 % of total production is sold directly to urban wholesalers in regional centres.

Figure 5 shows the numerous categories of traders involved in sesame marketing

especially at the grass roots. However, only 8 % of the harvested sesame goes directly

to wholesale traders who offer better prices. This reflects the problem of low and

uneconomical volumes highlighted earlier. Rural assemblers account for 50 % of the

aggregate volume. Because these are seasonal and non-permanent traders who

operate only on market days it can be concluded that majority of sesame is sold through

spot transactions which are not governed by contracts or institutions. Consequently, it is

difficult to enforce quality standards or contracts between the actors, which limits access

to markets that have stringent quality requirements. Farmers may also engage in

opportunistic behavior such as adulteration of sesame with sand or soil since there are

no feedback channels between traders and farmers or traceability.


14

Figure 5: Shares of Aggregate Market Volume by Market Channel

The challenges to sesame production at the farm level include: lack of equipment for

land preparation, which leads to late planting; crop losses from pests and diseases,

which reduces yields; non-availability of seed; and labour, particularly for weeding the

crop which is sown broadcast. Because smallholders produce small amounts, their

bargaining power is weak. Collective marketing would allow farmers to bargain for better

prices or sell directly at regional level where the returns are higher. However, availability

of land was not a constraint as farmers had spare land under fallow that could be used

to expand sesame production.

Rural assemblers 50%

Unsold / Home consumption

23%

Rural retail shopkeepers

11%

Farmers/Rural Consumers

8%

Rural wholesalers 6%

Regional Wholesalers

2%


15

4.3 Sesame Marketing

4.3.1 Value Chain Map

Figure 6 presents the volume flows of sesame from the production sector to the market.

Uganda produced 158,600 metric tons of sesame in 2008 (FAO, 2011)) . Results from

our farm household survey showed that 77 % of total production (or 122,122t) enters the

market. The remaining 23 % is consumed at the household level.

Sesame is consumed in variety of ways, including sesame ground into paste, made into

stew and consumed with other foods such as the popular smoked meat. Sesame paste

is also mixed with groundnut paste and spread on bread. Sesame oil is also believed to

have some medicinal properties and it is applied to small children and on sores as an

ointment. Sesame is also processed by roasting sesame seeds, mixing with honey and

sugar, and then rolled into balls or pellets to be eaten as a snack. At the household level,

the most popular use of sesame was either roasted or ground into paste. Despite the

fact that sesame yields up to 55 % of sesame oil, processing of sesame oil was not

prevalent at household level.

Marketed Surplus 122,122t (77%)

Rural Assemblers 79,300t (50%)

Farmers /Rural Consumers 39,650t (25%)

Rural Wholesale 9,516t (6%)

Export 65,772t (42%)

Urban Consumers

15,860t (10%)

Urban Retail 15,860t (10%)

Export Processors 65,772t (42%)

Domestic Processors

15,860t (10%)

50%

11%

2%

6%

23%

6%

21%

21% 10%

6%

42%

8%

Rural Retail 17,446t (11%)

Regional Wholesale 49,116t (31%)


16

Figure 6: Value Chain Map for Sesame in Northern Uganda

Of the 77 % of sesame production that enters the market, 50 % (79,300t) passes

through rural assemblers, which includes foot traders, bicycle traders, open air retailers.

Six percent (9,516 t) is handled by rural wholesale buyers, namely bulk buyers who buy

and transport sesame to regional centres where it is sold to regional wholesale traders

(23 %), Export processors (21 %) and six percent is sold to farmers and rural

consumers. Cumulatively, Twenty five percent (39,650 t) of sesame that leaves the farm

gate into the market is bought by other farmers and rural consumers. Therefore, only

half of the sesame produced leaves the production regions to regional and export

markets. This suggests that sesame is equally important for local consumption as for

trade with other regions.

At the regional trading centres, sesame is aggregated into larger volumes. Collectively,

regional trading centres handle 31 % (49,116 t) of the total sesame produced. Regional

traders are fewer and transactions involve large volumes with both vertical and

horizontal transactions between traders. Regional traders then sell to export and

domestic processors in the capital city Kampala and other border towns such as Busia

and Kitgum on the Ugandan and South Sudan border respectively. A number of

exporters were found to have buying centres in these regional markets where they buy

from directly from rural wholesalers or regional Wholesalers.

Approximately 42 % (65,772 t) of sesame produced is exported. Exporters are based in

the capital city Kampala where processing for export is done. Processing is either

manual or mechanized where sesame is cleaned, bagged into 50 kg bags and packed

into 20 foot containers ready for export. Domestic processors and urban retail traders

are responsible for the remaining 10 % (15,860 t). The processors clean the sesame and

pack into smaller packages. Besides snacks, sesame is used in the confectionery

industry, and can be milled together with groundnut into paste, a popular delicacy eaten

as a side dish or applied on bread as butter.

4.3.2 Trader profile

Table 8 presents a socio-economic profile of the sample traders. Results indicate that

majority of businesses (86 %) are owned by men. Only urban wholesale businesses and

urban retail shop keepers reported ownership by women. Whereas other traders move

from one market to another, these two types of trader operate from fixed locations.

Years of schooling ranged from six years of primary education to 14 years of tertiary

education. The mean of nine years indicates a relatively high level of literacy. Urban

wholesalers had the highest level of schooling (10 years) while rural assemblers had the

lowest (six years). The relatively high level of literacy among traders shows that they

have the capacity to benefit from training on various aspects of sesame trade. Most of

the sample traders have considerable experience in the sesame trade, ranging from 8 to


17

13 years, suggesting that that sesame trade is profitable and sustainable over the long

term.

The high number of buying centres shows that buying is well organized. On average,

traders have three buying points within the district and four buying points outside. Urban

wholesalers and exporters have the largest number of buying points outside the district,

showing the effort required to acquire large volumes of sesame. The majority of the

businesses (89 %) had operating licenses to trade in sesame and other agricultural

commodities. The cost of these licenses may present a barrier of entry or, if other

traders can operate freely without a license, penalize licensed businesses.

Sesame trading is an source of rural employment for rural labor, both skilled and

unskilled. On average, 1.5 workers are directly employed as loaders, drivers, and store

attendants either on a casual or permanent basis. Larger wholesalers and exporters

engage skilled labor to run the sesame processing and export business. Annual turnover

shows that urban wholesalers handle US $ 1.4 million of sesame each year. The lowest

turnover is found among urban open air retailers (US $ 739). Turnover was calculated

only from sesame proceeds. The healthy turnover from the majority of the traders

indicates that sesame has the potential to support a strong business.


18

Table 8 Trader Profiles and Organization of the Sesame Marketing Activities

Gender Education Management

Licensed

business

enterprise

Buying Centres

Mean

annual

Turnover

($ US) Type of trader No Percent Female Male

Years of

education

(mean)

Years of

experienc

e

(mean)

Permanent

employees

(mean)

Salarie

s

(Us$)

rent for

premises

(Us$)

No Yes

within

the

district

outsi

de

the

distric

t

Rural assemblers 3 10.7 0 3 6 12.67 1 28.6 34.03 0 3 2

25,313

Rural wholesalers 5 17.9 0 5 7.6 7.8 0 0 8.54 0 5 2 1 38,787

Urban/Regional wholesalers

12 42.9 2 10 10.36 10.83 2.25 357.66

171.97 1 11 3 8 1,421,090

Urban exporters 2 7.1 0 2 7 14 N/A 0 0 0 2 11 1 -

Urban retail shopkeepers

4 14.3 2 2 10 8.5 2.75 44 48.4 1 3 5 2 70,349

Urban open air retailers

1 3.6 0 1 14 10 0 0 2.64 1 0 1

739

NGO/ Agent 1 3.6 0 1 10 2 N/A 0 19.8 0 1 3

19,319

Total 28 100 4 24 9.24 10.04 1.46 260.4 86.59 3 25 3 4 629,443

Source: Authors


19

Table 9 Trader Asset Holding for Selected Items (Number of Traders who Reported Owning Asset)

Office Warehouse mobile Radio Truck landline Weighing

scale

Bicycle

Type of trader

Rural assemblers 0 3 3 3 0 1 3 3

Rural wholesalers 0 5 4 5 0 1 4 5

Urban wholesalers 4 8 8 8 6 1 9 9

Urban exporters 0 2 0 0 0 0 1 0

Urban retail

shopkeepers

0 1 3 4 0 0 4 3

Urban open air retailers 0 1 0 0 0 1 1 0

NGO/ Agent 0 1 1 1 0 0 1 1

Total 4 21 19 21 6 4 23 21

Source: Authors


20

Table 9 presents asset ownership by sesame traders. The assets considered were those

that were considered important in handling, transportation and trading of sesame. The most

common assets owned include weighing scales (82 %), bicycles (75 %), stores and

warehouses for storage (75 %), radios and mobile telephones. Trucks and offices were only

found among large wholesale traders. Urban wholesalers had the most assets, enabling

them to handle large volumes and achieve a high turnover.

4.4 Prices

Table 10 presents the price received by a market actor from sales of sesame through

different sales channels. The rows show the actors while the columns show the actors to

whom sesame is sold. The intersection of the rows and columns shows the price which the

seller receives from this particular buyer. Table 8 also shows the market channels available

to a particular actor. Prices were converted from Uganda shillings to $ US using at the

January 2010 exchange rate (1 $ US = Ugsh. 2273). These prices are gross revenues

received by the seller and include transportation and transaction costs incurred in concluding

the transaction.

Farmers have nine separate market channels to choose from. The price ranges from $ US

0.70 when sold to rural open-air retailers and rural shopkeepers to $US 1.1 when the farmer

sells directly to urban exporters or urban retail shopkeepers. The mean selling price by

farmers was $ US 0.90. However, given that rural assemblers account for 27 % of total

sesame production (Figure 4), we consider $ US 0.80 as the most common price received

by farmers.

Rural assemblers have five sales channels available. The price received by rural assemblers

ranges from $ US 1 when selling to urban wholesalers and $ US 1.2 when sold to urban

processors. The mean price is $ US 1.1. The dominant outlet for the rural assembler is

selling to urban wholesalers. The farmer receives 84 % of the rural assembler sale price.

Urban wholesalers have a choice of four sales channels to choose from. These are

horizontal transactions between the urban wholesalers ($ US 1.1), urban processors ($ US

2), urban exporters ($ US 1.3) and urban retail shopkeepers ($ US 1.1). The mean price

received by this type of trader is $ US 1.4. However, the dominant sales channel is urban

exporters who account for 20% of total sesame production. The proportion of the farm gate

price to the regional wholesale price is 60 %.

These results suggest that the market at the grassroots level is competitive, as shown by the

numerous actors at the lower levels of the chain. However, it can be seen that as sesame

moves to higher levels of the chain and aggregation takes place the number of actors is

reduced, shifting market power in favour of a few dominant players. The share of the price

received by farmers falls from 90 % of the ex-assembly price to 60% of the ex-regional

wholesale price. This gap can be further reduced through adoption of institutional

innovations such as formation of producer marketing groups where farmers can aggregate

their produce and market collectively or sell at regional markets where they stand to gain

higher returns by selling to urban wholesalers as compared to rural assemblers.


21

Table 10 Sesame Selling Prices in Different Marketing Channels ($ Us/Kg)

Actor

Channel Rural

consu

mers

/farmer

s

Rura

l

open

air

retail

ers

Rural

retail

shopkee

pers

Rural

assem

blers

Rural

wholes

alers

Urban

wholes

alers

Urban

proces

sors

Urban

export

ers

Urban

consu

mers

Urban

retail

shopkee

pers

Urba

n

open

air

retail

ers

Me

an

selli

ng

Pric

e

Farmer 0.9 0.7 0.7 0.8 0.8 1.0 - 1.1 - 1.1 1.0 0.9

Rural

open air

retailers

- 1.0 - 1.0 - - - - 1.2 - - 1.1

Rural

assembler

s

1.1 - 1.1 - - 1.0 1.2 - - 1.1 - 1.1

Rural

retail

shopkeep

ers

- - - - - 1.1 - - - 1.0 - 1.0

Urban/Re

gional

wholesale

rs

- - - - - 1.1 2.0 1.3 - 1.1 - 1.4

Urban

retail

shopkeep

ers

- - - - - - - - 2.1 - - 2.1

Rural

wholesale

rs

1.1 - - - - 0.9 1.2 - - - - 1.1

Source: Authors, Note: 1 $ US = UGS 2273 (Jan. 2011).

4.5 Access to Credit

Sesame is a high value commodity and substantial sums are invested in the business.

Access and availability of credit are important in the easing financial constraints on start-up

and working capital. Table 9 presents the results from the surveyed traders on credit access

in the trading year 2010/2011. Overall, one third of the traders surveyed had attempted to

get credit during the year for use in their sesame business, but only one third of the traders

who applied received credit. Commercial banks were the largest source of credit, accounting

for 90 % of those who obtained credit. Credit from relatives was the only other source of

credit cited in the survey. Urban wholesale traders have the highest proportion accessing

and getting credit, which makes it possible for them to handle large volumes of sesame

seed. Most of the traders surveyed used the credit obtained for sesame trade while 20 %

used the credit obtained for other commodities as well.


22

Table 11 Access to Credit by Traders

Did you try to

get any credit

during the

2010/11 for your

sesame

business

Did you

receive the

amount that

you tried to

obtain Source of credit How was the cash used

Type of trader No Yes Yes

Commercial bank Relative/friend

Simsim business

Other commodity

Rural assemblers 2 1 1 1 0 1 0

Rural wholesalers 4 1 1 1 0 1 0

Urban wholesalers 5 7 7 6 1 5 2

Urban exporters 2 0 0 0 0 0 0

Urban retail shopkeepers 3 1 1 1 0 1 0

Urban open air retailers 1 0 0 0 0 0 0

NGO/ Agent 1 0 0 0 0 0 0

Total 18 10 10 9 1 8 2

Source: Authors

4.6 Market information

Access to production and marketing information is important for the performance of sesame

trade. Table 12 presents the responses on traders’ access to information relating to farmers

production costs, storage practices, grading and labelling, domestic market, export quality

standards, phyto-sanitary issues and certification issues. Results show a low level of

awareness on many of these topics.

Three in ten traders (29 %) were aware of farmers’ production costs and good storage

practices. However, only two in ten traders (21 %) were aware of grades and labelling for

sesame. Nine in ten traders (93 %) had no access to market information for either domestic

and export markets. There is therefore a need to have a structured dissemination of market

intelligence on aspect such as sesame seed demand, supply and prices for both domestic

and export markets. This would play an important role in proper functioning of the market,

reduced inefficiencies, increased competition and lead to better returns to traders and

farmers.

The results show that 89 % of traders had no access to information about export quality

standards and 93 % had no access to information about phyto-sanitary/certification. Major

export markets such as the European Union, the United States, and Japan place a high

premium on quality and phyto-sanitary concerns. This therefore raises the importance of

dissemination of information on standards requirements and certification requirements to

both traders and farmers.


23

Table 12 Access to information by traders

Frequency Percent

Information Type No access to

information

Have access to

information

No access tp

information

Have access to

information

Farmers production costs 20 8 71% 29%

Good storage practices 20 8 71% 29%

Grading and labeling 22 6 79% 21%

Domestic market 26 2 93% 7%

Export market 26 2 93% 7%

Export quality standards 25 3 89% 11%

Phyto-sanitary and other certification 26 2 93% 7%

Source: Authors

Table 13 shows the information sources that were mentioned by the traders. National

Agricultural Research Organization (NARO)/Ministry of Agriculture, Animal Industry and

Fisheries (MAAIF), followed by Olam international (an exporter) were the most common

sources of information. NARO/MAAIF had the most diverse subject offering as compared to

other information providers. The topic with most suppliers of information was sesame

production and storage practices. Very few sources of information were available for other

topics. It is important, therefore, to stimulate the supply of market intelligence on markets,

prices and demand as well as other requirements and non- tariff barriers that have an impact

on trade.

Table 13 Traders’ Sources of Information

Information on:

Total Information source

Farmers

production

costs

Good

storage

practices

Grading

and

labelling

Domestic

market

Export

market

Export

quality

standards

Phyto-

sanitary and

other

certification

Farmers 2 0 0 0 0 0 0 2

Organic farming institutions

/NGOs

2 0 0 0 1 0 1 4

Mukwano(Processor) 0 2 0 0 0 0 0 2

NARO/MAAIF 1 3 1 1 1 1 0 8

Nile breweries 0 0 0 0 0 0 1 1

Olam(Exporter) 2 1 1 0 0 0 0 4

Produce Dealers 0 0 0 1 0 1 0 2

Total 7 6 2 2 2 2 2 23

Source: Authors

4.7 Grain and batch characteristics considered in sesame marketing

Grain characteristics relate to individual grain considerations such as grain colour, shape

and size while batch characteristics are aspects relating to a consignment, including

homogeneity, cleanliness of the grains and the percentage of foreign matter. Table 14 shows

the characteristics traders considered in buying and selling sesame grain. Colour ranges

from white to light brown to grey-coloured grains depending on the variety planted. All

traders preferred white coloured grains when buying sesame and about 10 % preferred


24

white-coloured grains when selling. Improperly dried grains have a brownish hue so white is

an indicator of well-dried grains. A light brown colour indicated that grain was not fully or well

dried.

Sesame II, an improved variety promoted by this project, is white in colour and therefore has

high market demand. Nonetheless, traders did not report rejection based on grain colour.

The majority of traders had no shape preference in either buying or selling. One third of the

traders preferred large sized sesame grains while the remaining two thirds of the

respondents showed no preference based on size.

Table 14 Sesame grain characteristics considered in buying and selling

Grain

Characteristics Trader

Category

Total

Rural

assembly

Regional

Wholesale Exporters Urban Retailers

Buying Color White 10 11 3 4 28

Grain shape considered

when buying

No shape

consideration

7 11 3 2 23

Oval 3 0 0 0 3

Elongated 0 0 0 2 2

Grain size considered

when buying

No size consideration 5 9 1 1 16

Large 3 2 2 3 10

Medium 1 0 0 0 1

Small 1 0 0 0 1

Selling Color White 8 10 3 4 25

Brown 0 1 0 0 1

Light grey 2 0 0 0 2

Grain shape considered

when selling

No shape

consideration

7 11 3 2 23

Oval 3 0 0 0 3

Elongate 0 0 0 2 2

Grain size considered

when selling

No size consideration 5 9 1 1 16

Large 3 2 2 3 10

Medium 1 0 0 0 1

Small 1 0 0 0 1

Source: Authors

Table 15 presents the batch characteristics that traders considered important in buying and

selling sesame. To get the ranking of the preferred quality, the respondents were asked to

rank those qualities that were mentioned as important. A rank of 1 was given to the most

preferred, a rank of 2 to the second most preferred quality, and so on. A mean was

calculated where those qualities with the lowest mean rank were most preferred. Clean

grain, followed by homogeneity in the batch, were the two characteristics considered most

important by traders. Two thirds of the traders did not consider presence of foreign matter a

major problem. Batch cleanliness was a major concern across categories for a majority of

traders. However, exporters and rural assemblers accorded cleanliness a higher importance


25

than regional wholesale traders. The problem of cleanliness of arises during the shelling

and drying stages of sesame harvesting. Most farmers thresh and dry sesame on the bare

ground so that sesame becomes mixed with soil. Simple technologies such as drying

sesame on a tarpaulin or plastic sheet could eliminate this problem, and also reduce the risk

of contamination with microorganisms found in the soil. There is therefore a need to

sensitize farmers on the need for post-harvest processing to raise the phyto-sanitary

standard of sesame.

Table 15 Sesame Batch Characteristics Considered in Buying and Selling

Batch Characteristics Trader Category Total

Rural

assembly

Regional

Wholesale

Exporter

s

Urban

Retailers

Buying Homogeneity buying Not Considered 2 7 1 2 12

Uniform 6 5 2 3 16

Cleaned grain buying Not Considered 0 5 0 3 8

Yes 8 7 3 2 20

Max allowed of foreign

matter (%) when buying

No consideration 7 9 1 3 20

Below 10% 1 3 2 2 8

Selling Homogeneity selling NA 2 7 1 2 12

Uniform 6 5 2 3 16

Cleaned grain selling Not Considered 0 5 0 3 8

Total 8 12 3 5 28

Max required of foreign

matter (%) when selling

No consideration 7 8 1 3 19

Below 15% 1 4 2 2 9

Source: Authors

Table 16 shows the frequency of occurrence and ranking of quality characteristics that

traders considered in buying and selling sesame. The most frequently considered traits were

grain color (86%), cleaned grains (71%) and percentage of foreign matter (54%). Grain color

was ranked first, cleaned grains second and grain weight third. The results support the

conclusions drawn from Table 14.

Table 16 Ranking of Sesame Quality Traits by Traders When Buying and Selling

Quality Characteristic Importance in buying or selling

Mean rank for buying

Mean rank when

selling

Frequency Percent of households mentioning N Mean N Mean

Grain color 24 86% 21 1.00 23 1.13

Cleaned grains 20 71% 16 2.06 18 2.06

% of foreign matter 15 54% 9 2.78 9 2.78

Grain weight 11 39% 5 2.40 6 2.33

Grain size 8 29% 2 2.50 4 2.75

Homogeneity 7 25% 6 2.83 5 2.80

% of grains moisture 6 21%

Packaging material 4 14% 1 2.00

% of oil content/Yield 2 7% 3 3.00 3 2.00

Grain shape 1 4% 1 2.00 1 2.00

% of insect damage 1 4%

% of chemical residues 1 4%

Source: Authors


26

Interviews with traders indicated sesame buyers were satisfied with the quality of sesame on

offer. It is also encouraging that 80 % reported that the quality of sesame in the market was

improving. Despite this, the study did not find specific code of conduct or guidelines

governing sesame marketing, trade or standards, especially for sesame exported to China

for oil extraction. Sesame exported as organically certified was governed by a voluntary

code of conduct developed by NOGAMU (discussed on section 4.1 of this report).

Table 17 shows the time that traders store sesame before selling. Except for regional

wholesalers, the majority of traders resell soon after buying. This is because grassroots

traders do not have storage facilities. Moreover, sesame is a high value commodity. Traders

may lack sufficient capital to accumulate sesame and therefore need a quick turnover in

order to return to the market and buy again. The longest period of storage observed was one

month.

Table 17 Traders’ Storage Practices

Trader Category Total Duration of storage

Rural

assembly

Regional


Percent

Less

than a

month

1

month

Store sesame No 6 5 2 3 16 57 N/A N/A

Yes 2 7 1 2 12 43 6 6

Total 8 12 3 5 28 100

Source: Authors

4.8 Trends in Sesame Seed Business

Table 18 presents a self-assessment of business trends by sesame traders. The majority of

traders (71 %) felt that the business was on an upward trend. A few, especially the urban

retailers, felt that their business was constant. This shows that there is confidence among

the traders which is crucial to unlock the potential for sesame in Uganda.

Table 18 Trends in Sesame Business

Trend of your sesame

business growth

Trader Category Total

Rural

assembly

Regional


Increased 7 9 2 2 20

Decreased 0 1 1 0 2

Constant 1 2 0 3 6

Total 8 12 3 5 28

Source: Authors


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4.9 Strengths and Weaknesses of Sesame Production and Trade

Figure 7 presents the results of the SWOT analysis carried out with the sesame traders.

Strengths and opportunities are the internal and external factors that are advantageous to

the business while weaknesses and threats are the internal and external factors that put the

business at a disadvantage.

The strengths of sesame seed traders include availability of credit facilities at wholesale

market level, and the high demand for sesame seed in both domestic and export markets. A

low volume, high value commodity like sesame has advantages for a landlocked country

such as Uganda because handling and shipping costs are reduced. Trade in sesame was

reported to be profitable. Infrastructure in the regional centres was well developed thus

lowering operating and transportation costs for sesame. Traders in regional markets

observed that location in the produce section of the markets presented opportunities for

information sharing, central accumulation of sesame and good supply of sesame.

Several weaknesses affecting the marketing and trade in sesame in Uganda were also

identified. These included inability to honour supply contracts, and opportunistic behaviour

where farmers adulterate sesame seed with soil and sand to increase the weight. Supply

was fragmented because the low average quantity supplied by farmers meant that traders

had to cover a wide area to obtain sufficient sesame. Poor post-harvest handling practices

led to contamination with soil and dung during threshing and winnowing. Poor infrastructure

at the assembly level limited access to markets for farmers in the periphery and ultimately

the total volume marketed. Exporters are few, limiting competition and leading to

concentration of market power among a few large exporters.


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STRENGTHS WEAKNESSES

Sesame is a low volume, high value product

High demand both locally and internationally

Good profit margins

Access to banking and capital facilities

Location in the produce section of the market

Availability of credit at wholesale level traders

Good transport infrastructure the regional centres

Support from NGO’s and industrial association

Uganda sesame is high yields of recoverable oil

Well-developed shipping lines to export markets

Competition at assembly level thus competitive pricing

Fragmented supply wide area and small quantities per producer

Untrustworthy agents, failure to honour supply contracts among organic farmers

In adequate capital investment at lower assembly levels

Opportunistic behaviour e.g. adulteration with soil and sand

Poor transport infrastructure at the assembly level

Poor handling at farm level raising phyto-sanitary concerns

Failure to address quality concerns and phyto sanitary concerns

High handling costs such as loading and unloading

High concentration of market power to a few exporters

OPPORTUNITIES THREATS

Relative ease of expansion of sesame production in response to better prices

Rising global demand

Availability of premium markets such as Europe and niche organic markets,

Ready domestic and export market for sesame

Security and stability in the production regions and reduction of internal displacement

Limited aggregate amounts of sesame available for exports thus low economies of scale and in ability to attract many global players

High road transport cost to Mombasa as compared to shipping costs to China and other markets

Existence of two markets in far east and Europe, one has high demands on quality while China is very lax

Continued use of DDT in the control of malaria which may leave traces in samples affecting access to niche organic markets

Scarcity of improved planting material

Pests and plant diseases affects production

Figure 7: SWOT Analysis Matrix for Sesame Trade

Traders also highlighted opportunities. These included the relative ease to raise production

in response to better prices, because sesame is a semi-annual crop that can be cultivated

twice in one year. Global demand for sesame seed and products is increasing. Security has

also improved in the Northern and Western regions of Uganda where sesame is grown.

Growing niche markets for organic sesame create opportunities for farmers to benefit from

higher prices in these markets.

The threats to sesame included the danger of decreasing soil fertility through continuous

planting. However, this can be averted by educating farmers in crop rotation and other

methods of maintaining productivity. The non-availability of improved sesame varieties was

also seen as a threat, since recycled seed lowers yields. Non-tariff barriers and expensive

certification processes were seen as a threat because they posed barriers to entry into

lucrative European markets. Europe and China, the two major export markets, make


29

different demands on quality. Without clear price differentiation based on quality, it is difficult

to introduce quality standards, which limits access to more lucrative markets. It was also

observed that there is a high transport cost to port of Mombasa ($ US 1200 per 20 tonnes)

as compared to shipping to China ($ US 300). Railways transport would be a cheaper

alternative but it was said to be unreliable.


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5 Exports

The value of the world market for sesame grain in 2006 was $ US 1 billion (ITC, 2008). The

world market has grown in both value and volume. Between 2002 and 2006 the recorded

growth rate in the world market was 22%. Table 19 presents export statistics from Uganda

Bureau of Statistics for the years 2005-2009. During this five-year period exports of sesame

grew by 63 % in volume, from 7,412 t in 2005 to 12,107 t in 2009, and by 180 % in value,

from 4. 7 million $ US in 2005 to 13.4 million $Us in 2009. Sesame seed also increased its

share in the value of total exports, rising to 1 % in 2009. Sesame is a high value, low-volume

crop that makes it easy to handle and transport to distant markets. The average value per

tonne rose from $ US 645 to a high of $ US 1,104 per tonne in 2009.

Table 19 Ugandan sesame exports, 2005-2009

Item Year

2005 2006 2007 2008 2009

Quantity (ton) 7412 7568 5945 14154 12107

Value (000 $ US) 4779 4547 5477 15884 13369

Exports by percentage value of total

exports 0.6 0.5 0.4 0.9 0.9

Average Value per ($ US/ton) 644.77 600.82 921.28 1,122.23 1,104.24

Source: UBOS (2010)

Figure 8 shows trends in the mean export prices for selected countries producing sesame

seed. The world price for sesame seed shows a steadily rising trend in the last decade,

rising from $ US 650 per tonne in 2001 to $ US 1300 per tonne in 2009. The year 2008 has

the highest recorded price of $ US 1500 per tonne; this was the year of global financial crisis

where there was a rise in general commodity prices. Prices in China remain high and

attractive for an exporting country like Uganda. Nigeria as compared to Uganda has

experienced phenomenal rise in prices mainly driven by the relative abundance of sesame

and attracting exporters who require large volumes. This presents an opportunity for Uganda

since higher volumes available for export will offer economies of scale for foreign buyers.


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Figure 8: Trends in export prices, 2001-2009 ($ US per tonne)

Source: ITC (2012)

5.1 Sesame Export Destinations

Figures 8 (a) and (b) show the pairing of export destination and prices in the destination

markets. The Figure shows that there are three major market groupings:

1. European markets (Austria, Denmark, Germany and Switzerland);

2. The Middle-East (Turkey, Egypt and United Arab Emirates); and

3. The Far-East (Singapore, Japan and China).

European markets pay the highest value per metric tonne for Ugandan sesame. However,

these countries account for only a small share of the total volume of sesame exported. The

highest volume of Ugandan sesame is exported to United Arab Emirates and China which

pay the third lowest and the second lowest prices per tonne, respectively. Hence, there is

potential to realise higher value per tonne by changing export destination from the Far-East

to higher value European markets.

0

500

1000

1500

2000

2500

3000

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

Pri

ces

in U

S$

Year

World Nigeria Sudan China Uganda


32

Figure 9: Sesame export prices and volumes for major destinations

Source: ITC (2012)

Opportunities for Uganda lie in the relative ease with which sesame seed can be produced,

meaning that it is possible to increase supply in a lucrative market over a small period of

time. The main challenge for such re-orientation is to overcome non-trade barriers to

European markets, through certification of compliance to a variety of codes of conduct, such

as Global Good Agricultural Practices (GLOBALGAP). This requires increasing traceability of

farm to fork and addressing phyto-sanitary concerns in post-harvest handling of sesame

seed. However, markets in the Far-East and China do not discriminate based on quality and

have little if any requirements for entry. Consequently, farmer and traders have no incentive

to invest in practices that will increase eligibility of sesame for access to higher value

markets.

5.2 Niche Markets: Organic Sesame

Demand for organic commodities continues to rise. Growth is driven by strong and

increasing consumer awareness of health and environmental issues as well as aggressive

marketing by retail groups.

Shares Uganda is one company involved in the export of organically certified sesame to

European and other premium markets. Shares works with sesame farmers in the main

production regions of Lango and West Nile. The company’s field staff works with farmers’

groups to register and train farmers in good agricultural practices and organic growing of

sesame. At harvest farmers groups collect sesame seed and collectively deliver it to Shares.

Great effort is made to identify the produce from each farmer to ensure traceability.

Shares Uganda has a central processing plant in Kampala where it has invested heavily in

cleaning and fumigation equipment to exterminate vermin, insects, larvae and eggs. The

production process is certified by Ecocert (an independent organization that conducts

inspections and certifications) and Bio-Suisse certification. Certification of the entire

0 1000 2000 3000

United States of America

United Arab Emirates

Egypt

Turkey

Germany

Austria

Uganda Sesame Export Volumes 2010

Exported quantity in 2010, Tons

0 1000 2000

United States of America

United Arab Emirates

Egypt

Turkey

Germany

Austria

Prices at Uganda Sesame Export Destinations 2010

Exported unit value, US Dollar/Tons


33

production process is costly and may be a barrier to entry to other players. The study did not

find any difference in the price of conventional sesame and the price offered to farmers by

Shares Uganda.


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6 Conclusions and Policy Implications

The four specific objectives of this study were to describe the structure and functioning of the

value chain, measure the economic returns to participants along the value chain, identify

market constraints and opportunities, and identify opportunities for market expansion.

The value chain for sesame in Uganda is characterized by numerous small producers,

sellers, and buyers. Sesame is produced by smallholders each growing a total 0.37 ha

across two growing seasons. Average production is 222 kg per household. About 77 % of

total production enters the market. Similarly, the majority of traders are small-scale.

Marketing involves numerous traders as sesame moves from grassroots assembly to

regional markets and then to the capital city where processing and export activities take

place. Rural assembly is typically a seasonal business with an average turnover of $ US

25,000. Only urban wholesalers have the capital and storage facilities to generate a large

turnover, averaging $ US 1.4 million.

A map of the sesame value chain was developed showing the volume handled by the

various actors along the chain as the commodity moves from farm gate to the consumers

and export markets. Of the total sesame production, 50 % passes through rural assemblers,

and 6 % is handled by rural wholesale buyers who buy and transport sesame to regional

centres where it is bought by regional wholesale traders. Regional wholesalers sell sesame

to export and domestic processors. About 42 % of the crop is exported, 10 % is consumed in

urban centres, and the remaining 25 % is sold for consumption in rural areas.

Numerous traders from the grassroots to the regional level make the market for sesame

reasonably competitive. On average, the farmer gets 70 % of the ex-local assembly level

price and 60 % of the ex-regional level price. This shows that there is potential for a 10 %

increase in the price received by the farmer where they sell collectively at regional level.

Smallholders do not have strong bargaining power and collective marketing would allow

them to bargain for better prices or sell directly at regional level where the returns are higher.

The market for sesame suffers from several constraints. At the farm level, the area planted

to sesame is limited by lack of equipment for land preparation, non-availability of improved

seed, and high labor requirements, particularly for weeding and harvesting. At the market

level, the main constraints facing rural assemblers include the high transaction costs of

buying from many small sellers, the need to operate several purchasing centres to acquire

the desired volume of sesame, and their low working capital which limits the quantity they

can purchase. Only one-third of sesame traders were able to obtain bank credit for their

business. The majority of traders lack access to relevant information about grades and

labeling, phyto-sanitary standards, export quality standards, and about domestic and export

markets. Consequently, traders’ buying decisions are determined primarily by colour and

whether grain has been cleaned, rather than by other quality standards such as

homogeneity, percentage of foreign matter, grain moisture, or damage from pests and

diseases. This reduces the quality of the sesame that reaches urban and export markets.

Opportunities clearly exist to improve sesame marketing by improving quality through better

post-harvest practices that reduce contamination, and providing market intelligence to

traders on markets, prices, and quality requirements. At present, however, farmers and


35

traders have little incentive to improve quality since most sesame in Uganda is produced for

the domestic market or exported markets that have minimal quality standards.

Consequently, efforts to improve quality will depend on buyers’ willingness to pay for quality.

Uganda’s sesame exports go either to Europe, the Middle East or the Far East. Europe pays

the highest prices for Ugandan sesame, but account for only a small share of the total

volume of sesame exported. The highest volume of Ugandan sesame is exported to the

United Arab Emirates and China which pay the third lowest and the second lowest prices per

tonne. Standards for the Middle East and the Far East are less stringent than for Europe.

Uganda would earn more from sesame if it could increase the share of exports to Europe.

However, this would require improving quality to reach the required standards. Even if

quality is improved, there is no guarantee that the higher selling price will benefit producers.

One firm was found to export organically certified sesame and receiving premium prices.

However, at the farm level there was no difference in the prices paid for conventional and

organic sesame.

Improved sesame production combined with a better functioning marketing system can

contribute to reducing poverty in Uganda. There are several policy instruments open to the

government that may positively influence sesame production and marketing

1. Farmers do not have access to information on improved production practices, market intelligence, value addition, better post-harvest handling and demands on quality and standards in different markets. Such information may be included in state extension programs for dissemination to all stakeholders in the sesame seed value chain.

2. Sesame production is characterised by small production units which requires an elaborate product assembly process. Collective action whereby farmers form groups or cooperatives will enable them to increase the bargaining power. They would also be in a position to take to produce to regional markets centres and earn higher returns as compared to selling at assembly level.

3. Prices in European markets are higher than in the Middle and Far East. Redirecting exports towards more lucrative markets will increase the value of sesame exports and benefit the economy as a whole. However, this will involve a significant effort to raise the standards and certification issues to overcome non-tariff barriers of entry to these lucrative markets.

4. Since Sesame contributes only 1 % of Uganda’s foreign exchange earnings, sesame is classified as a non-core export. However, the strong growth in exports for sesame shows it potential to contribute in the future. Moreover, unlike other export crops like coffee, sesame is grown in marginal areas in the Northern region. Promoting sesame will improve the distribution of income and equity within Uganda. This suggests the need to raise the profile of sesame seed in the agricultural policy agenda and discourse.


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References

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Da Silva, C. and de Souza Filho, H.M. (2007). Guidelines for rapid appraisals of agrifood

chain performance in developing countries. (Rome: Food and Agriculture

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Hellin, J. (2007). Maize value chains in East and Central Africa (ECA). A Draft background

document.(International Maize and Wheat Improvement Centre (CIMMYT).

International Plant and Genetic Resources Institute (IPGRI) and National Bureau of Plant

Genetic Resources, New Delhi (NBPGR) (2004). Descriptors for sesame (sesamum

spp.). (International Plant and Genetic Resources Institute. Rome. Italy; and National

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Major European Markets. (Geneva: International Trade Centre).

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of Statistics).

Muricho G. (2010). Baseline Survey of Sesame Production in North and Eastern Uganda: A

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